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- Convenors:
-
Isaac Abotebuno Akolgo
(University of Bayreuth)
Carla Coburger (University of Bayreuth)
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- Format:
- Panel
- Stream:
- Political Economy of Extractivism
- Transfers:
- Open for transfers
- Location:
- S44 (RWII)
- Sessions:
- Tuesday 1 October, -
Time zone: Europe/Berlin
Short Abstract:
What accounts for the resurgence of development financing crisis in Africa? What roles do trade, and African banking or financial systems play in eradicating the continent’s dependence on external finance? This panel will attempt to deconstruct the domestic and global contraints to financing development in African economies.
Long Abstract:
The new wave of indebtedness that has spread across several Africa countries serves as a reminder that the continent’s persistent cycles of debt crisis is far from over. In fact, combined with an increasing fragile, nevertheless exploitative global capitalist order, this new cycle of indebtedness is producing economic hardships similar to those of the 1980s’ African crisis. Rising inflation, unemployment, and increasingly precarious living conditions, compounded by the COVID-19 pandemic, are pushing young Africans to even more precarious migration journeys to Europe and North American. Why, after more than 60 years of political independence across most of Africa, has this crisis of financing development remained unaddressed? More importantly, what alternatives to generating finance for development exist in the continent’s economies? The global financial order is breaking apart, and rightly so. New alliances are emerging, notably the BRICS. Domestically, new financial instruments and markets (e.g growing capital markets, CBDCs, Mobile Money, etc) are taking root across Africa. How can these be leveraged to respond to the persistent inadequate supply of finance that most African countries face?
Accepted papers:
Session 1 Tuesday 1 October, 2024, -Mariusz Lukasiewicz (Leipzig University)
Paper short abstract:
Navigating the extractive economy between Lagos and Ibadan, African farmers, merchants and businesspeople challenged the late colonial state’s developmentalist interference. This paper investigates the institutional and organisational development of the Co-operative Bank of Western Nigeria.
Paper long abstract:
In the ‘late colonial period’ that followed WWII, the British administration’s shift to developmentalism intensified the colonial state’s institutional capacity to expand exports and reorganise the domestic market for agricultural produce. The introduction of marketing boards, the Colonial Development Corporation, financial intermediaries and the regulation of the booming co-operative sector reflected the late colonial state’s specialisation in agricultural exports. African businesspeople were quick to take advantage of the commercial opportunities presented by the growth and diversification of the economy. It was however in Nigeria’s Co-operative Movement where some of the clearest examples of agricultural innovation in the attempt to adapt local customs and economic institutions to the growing demand of the export sector are to be found. Even if Polly Hill (1970) never intended to study West Africa’s cocoa farmers as rural capitalists in the Marxian class process, Nigeria’s cocoa entrepreneurs consolidated their economic and political interests into new social identities though the Co-operative Movement. Navigating the extractive economy between Lagos and Ibadan, African farmers, merchants and businesspeople challenged the colonial state’s developmentalist interference. The establishment and political work of the Co-operative Bank of Western Nigeria during the indigenous ‘banking mania’ of the mid-1950’s was indeed the culmination of anti-colonial organisation and decades of financial marginalisation in the agricultural sector. This paper investigates the institutional and organisational development of the Co-operative Bank of Western Nigeria. As such, the paper aims to contribute to the expanding literature on the history of agricultural finance, rural capitalism, and the Co-operative Movement in Africa.
Ame Masuku (University of Pretoria)
Paper short abstract:
From the concession that liberal tax incentives are offered in extractive industries in Southern Africa, this paper demonstrates how these tax incentives result in unnecessary tax expenditure (revenue leak). The paper proposes a harmonized approach to the design and administration of tax incentives.
Paper long abstract:
This paper accepts that granting tax incentives is often indispensable in the formulation of tax policy especially with respect to extractive industries in Southern Africa. Indeed, all Southern African countries analyzed in this paper offer tax incentives in their extractive industries as a way to become attractive or remain attractive to investors. Importantly, these extractive industries are crucial revenue generators to the economies of the Southern African with a direct link to the poverty, wealth, development and GDP of the countries.
The result of the tax incentives should ideally be an increase or retention of foreign direct investment. However, this is often at a great expense because another inherent consequence of these tax incentives is the revenue loss or tax expenditure that results from them. This revenue loss or tax expenditure is the sums of tax that would have been collected by the Southern African country had the tax incentives not been offered. Despite this apparent revenue leak, the design and administration of tax incentives in Southern Africa is unregulated and unharmonized remaining the sole prerogative of the Southern African country wishing to lure investment. This paper argues that the revenue loss resulting from offering tax incentives in extractive industries in Southern Africa contributes to the crisis of development finance in Africa and should be mitigated. As a way to mitigate this revenue loss, this paper proposes a harmonized approach to the design and administration of tax incentives in extractive industries in South Africa.
Aminu Bakari Buba (Federal University of Kashere Gombe State Nigeria)
Paper short abstract:
This paper argues that the Nigerian Stock Exchange (NSE) would be a strategic tool to reduce the dependency on external debt and promote the growth of the national economy.
Paper long abstract:
The global financial crisis in 2008 had a devastating impact on the finances of the global south, particularly sub-Saharan Africa. In 2017, Africa's debt-to-GDP ratio exceeded the IMF's 55% benchmark, reaching 56%. Despite having a debt relief of $18 billion in 2005, Nigeria has continued to be heavily indebted due to external borrowing for development funding. Evidence reveals a consistent increase in the nation's debt-to-GDP ratio, which has been exacerbated by economic shocks and COVID-19, reaching alarming levels that hinder sustainable growth. Statistical trends indicate that the nation's fiscal health is being significantly impacted by the unsustainable accumulation of debt through conventional reliance on external loans. Addressing this challenge requires a paradigm shift towards domestic financial resources as the way forward. The Nigerian Stock Exchange (NSE), therefore, offers an innovative solution to the issue of external debt as it provides a reliable platform to raise funds for development projects, without adding to the national debt burden. In 2023, the NSE's market capitalisation exceeded $47.260 billion, indicating a significant amount of funds available to local investors. Relying on statistical evidence such as Nigeria's GDP growth rates, stock market capitalisation, and debt levels, this paper argues that the NSE would be a strategic tool to address Nigeria's rising debt crisis by reducing the dependency on external debt and promoting the growth of the national economy.
Basil Agoha (Chukwuemeka Odumegwu Ojukwu University Anambra State Nigeria) Favour Agoha (Chukwuemeka Odumegwu Ojukwu University, Anambra State, Nigeria)
Paper short abstract:
Crisis of development finance of Political Economy of Africa is not only real but a trap and perpetual economic strangulation. African therefore needs intellectual, psychical, physical, political resources and socioeconomic emancipation.
Paper long abstract:
Politics as the science of power system to finance, control,share and distribute resources is the basic foundation of all development economics. As a system , political structure has the anatomy of all other developments not only cascaded but depends on and are controlled by the capitalistic political system.Colonisation of Africa trunkated the smooth evolution of political economic system with the coerce imposition of political model that skewed perpetually the system to the colonial powers with Africa supplying the raw human and material resources only to receive finished technology and materials at a higher cost backed by punitive treaties as revealed by Niger,Malian francophone Africa. It is this imposed economic finance cascade that is the bane of African development bankruptcy,debt and dependency that characterised the 'post independent' Africa. On the surface it appears there is independence but the structure, anatomy and physiology of Africa still dependent on the colonial manipulation of inferiority and erosion. It is this understanding, dismantling and eclectic rebuilding the structure that can remove African countries from the clutches of intellectual, psychical, physical, political resources and socioeconomic emancipation.